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Friday, October 29, 2010

This week's employment law Case of the Week is a Title VII claim from a Muslim truck driver filed in the Eastern District of Pennsylvania. Complaint available here. The Plaintiff, Vasant Reddy, alleges numerous religion-based counts of religious discrimination.

Mr. Reddy is a Muslim truck driver who claims to have a "sincerely held religious belief that he cannot consume, possess, or transport alcohol or tobacco." Well, you probably see where this is going... his employer asked him to transport alcohol. Remember, employers generally have an obligation under Title VII to reasonably accommodate the sincerely held religious beliefs of employees provided this can be done without imposing an undue hardship on the employer.

[As always, it's a little more complicated than that. I recently appeared on the Proactive Employer podcast to discuss some of these issues in greater detail. Listen here.]

The employee refused, and the employer found another driver to make the run. Two days later the employee was terminated (actually, he alleges constructive discharge - resigning in lieu of termination). So what claims can we come up with from this fact pattern? Well, the plaintiff came up with three:

"Failure to Accommodate Religious Beliefs" - The employee alleges that only 5% of the employer's deliveries contained alcohol and/or tobacco, and that an accommodation would not impose an undue hardship on the employer.

"Retaliation" - Employee alleges that requesting the accommodation is a protected activity and that he was fired in retaliation for making the request.

As of today, these are only allegations in a Complaint. This case provides another example of conflict between religion and the workplace, and shows how that conflict can result in a variety of Title VII claims.

Thursday, October 28, 2010

On Monday, the National Labor Relations Board (NLRB) issued an order (available here) signalling a shift in how it will handle Graduate Students under the National Labor Relations Act (NLRA). The issue is whether grad students qualify as "employees" under the NLRA, 29 U.S.C. § 152(3) (aka “Section 2(3)”), which would make them eligible for collective bargaining rights. This latest salvo in the back-and-forth between the NLRB and... well, the NLRB shifts back toward counting the grad students as employees.

In this latest case, NYU and GSOC/UAW, petitioner sought to represent a unit of grad students at NYU. The Regional Director dismissed the petition without conducting a hearing because grad students are not "employees" under the NLRB's 2004 decision in Brown University, 342 NLRB 483. The NLRB reviewed the dismissal and remanded for a new hearing with the subtle hint that they "believe there are compelling reasons for reconsideration of the decision in Brown University."

In Brown, the NLRB "declare[d] the federal law to be that graduate student assistants are not employees within the meaning of Section 2(3) of the Act." This
was itself a shift, overruling the NLRB's 2000 decision in another NYU matter, New York University, 332 NLRB 1205. In Brown, however, the NLRB noted "25 years of untroubled experience under pre-NYU standards" with graduate students being treated as students and not employees.

Are you getting a feel for the back and forth yet? The NLRB's order from Monday does not expressly reverse Brown, but it's tough to see it as anything other than the writing on the wall.

Monday, October 25, 2010

Phil, you tell us the employer doesn't have a duty to accommodate under the ADA's association provision... yet the Plaintiff survived a motion to dismiss, claiming she was terminated for being late due to a medical emergency involving her daughter with a disability. So did the employer have to accommodate her or not!?

Excellent question! And being a man of the people, I will now provide the answer. In two words: Distraction Theory.

In Larimer v. IBM, 370 F.3d 698 (7th Cir. 2004), the Seventh Circuit defined three theories under which an employee may state a claim for association-based discrimination under the ADA. One such theory was labeled "distraction." An employee states a claim for "distraction" where he or she suffers an adverse employment action, such as firing, when:

[T]he employee is somewhat inattentive at work because his spouse or child has a disability that requires his attention, yet not so inattentive that to perform to his employer's satisfaction he would need an accommodation, perhaps by being allowed to work shorter hours. The qualification concerning the need for an accommodation (that is, special consideration) is critical because the right to an accommodation, being limited to disabled employees, does not extend to a nondisabled associate of a disabled person.

Plaintiff suggests a connection between her daughter’s disability and her termination by alleging that her absence from work on January 27, 2009, was due to her daughter’s medical emergency. This single incident, which could qualify as a distraction, occurred just one day prior to Plaintiff’s termination.

(emphasis added). This was sufficient for the pleading stage of litigation. Note that it "could" qualify as a distraction - the Court did not definitively resolve the issue.

For my Third Circuit (including Pennsylvania) readers: The Third Circuit has "noted" Larimer and its distraction theory, albeit in a footnote in a case not specifically addressing the issue. See Erdman v. Nationwide Ins. Co., 582 F.3d 500, 511 fn 7 (3d Cir. 2009).

Thursday, October 21, 2010

The Americans with Disabilities Act (ADA) defines unlawful discrimination to include associational discrimination:

[E]xcluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.

42 U.S.C. §12112(b)(4). This week's Lawffice Space employment law Case of the Week invokes the somewhat rare application of this ADA provision.

In Magnus v. St. Mark United Methodist Church, No. 10 C 380 (N.D. Ill. Oct. 19, 2010), an employee alleged that she was terminated because her daughter has various mental disabilities. The employee was late one day due to her daughter's medical emergency, and the employee had previously protested weekend hours due to her need to care for her daughter. Ultimately, her claim survived a motion to dismiss, but let's look at how these claims are analyzed.

(1) the plaintiff was "qualified" for the job at the time of the adverse employment action;
(2) the plaintiff was subjected to adverse employment action;
(3) the plaintiff was known by his employer at the time to have a relative or associate with a disability; and
(4) the adverse employment action occurred under circumstances raising a reasonable inference that the disability of the relative or associate was a determining factor in the employer’s decision.

I practice in Pennsylvania (which is 3rd Circuit territory) and this exact test has been adopted by some of the district courts, including the Middle District of Pennsylvania. See Erdman v. Nationwide Ins. Co., 621 F. Supp. 2d 230, 234 (M.D. Pa. 2007) aff'd, 582 F.3d 500 (3d Cir. 2009). Note that the 3rd Circuit affirmed this decision but did not specifically enunciate a test for ADA associational claims.

Readers may also be interested to know that the Magnus Court noted the associational provisions of the ADA do not mandate that employers accommodate the mothers of individuals with disabilities. The 3rd Circuit case I just cited, Erdman, similarly noted that "the association provision does not obligate employers to accommodate the schedule of an employee with a disabled relative."

Lawffice Space readers may recall my previous post detailing how to become a Supreme Court Super Nerd in 3 Easy Steps. It remains a popular entry. Well, consider this a follow-up - perhaps an Advanced Supreme Court Super Nerd step.

Rookie Super Nerds track the Court's opinions as they're released, and that was the gist of my earlier post. The die-hards get in the game well before that, including tracking the oral arguments. The Supreme Court has been publishing transcripts of oral arguments for awhile now.

But new this term, the Supreme Court is now posting audio podcasts of the oral arguments every Friday (of a week in which they hear arguments). They've already posted an employment law case, Kasten v. Saint-Gobain Performance Plastics Corp. Listen in as Justice Scalia calls the employee-side's interpretation of the word "filed" as used in a statute "absurd." Followed by Justice Kennedy openly mocking the attorney by asking to "go back to the question Justice Scalia 'filed' just earlier."

OK, I'm probably over-dramatizing a little. But, in all seriousness, I don't see good things happening for the employee-side in this case. We'll see though. You can also download the audio of the arguments to listen on the road. I see a lot of people in the gym with headphones on... somehow I'm guessing that I'm the only one listening to Supreme Court oral arguments. You too could be that nerd!

In the future we may delve even deeper into the realms of nerdery with certiorari grants and cert. petitions. Let's not get ahead of ourselves though.

Wednesday, October 20, 2010

The EEOC recently filed an Americans with Disabilities Act (ADA) lawsuit in the Eastern District of Louisiana. The EEOC claims that Lisa Harrison was fired for her obesity. The employer allegedly, "perceived Harrison as being substantially limited in a number of major life activities, including walking."

An important aspect of the ADA is that it covers more than just actual disabilities; it also covers employees with a record of having a disability, and employees regarded as having a disability by their employers.

George W. Bush signed the ADA Amendments Act (ADAAA) in 2008 (effective 1/1/2009). The ADAAA greatly expanded the ADA's coverage under the "regarded as" theory. Almost any perceived impairment can constitute a disability if an employer takes an action prohibited by the ADA because the employer perceives the employee as impaired. This does not include impairments that are both transitory (duration of six months or less) and minor.

Sunday, October 17, 2010

I had a hearing in Tioga County at the Court of Common Pleas on October 14, 2010 and grabbed some photographs for the Pennsylvania Courthouses Photo Album. Despite some construction out front, the courthouse was still quite a sight. As impressive as the outside looks, the inside was simply amazing. I dare say it was the most beautiful courtroom I've ever seen (OK, the U.S. Supreme Court ain't half bad either - and no, I have never had a hearing there... yet). Wellsboro itself had a historic feel to it and I wish I had more time to visit.

Thursday, October 14, 2010

I've only written about one case all week, what did you think would be the Case of the Week!? It's Missett v. Hub Int'l Pennsylvania, LLC, 2010 PA Super 178, 2010 WL 3704984 (Pa. Super. Ct. Sept. 23, 2010). You may say it's a cop out, but I have four depositions today so cop that (how's that for customer appreciation?)! In all seriousness, I've left an extremely important aspect of Missett for today's post: The factors to consider when determining the enforceability of a restrictive covenant, here a nonsolicitation agreement.

So, if the above two considerations were insufficient to render the covenant unenforceable, what else should the trial court have considered? First, the legal standard:

In Pennsylvania, restrictive covenants are enforceable if:
(1) they are incident to an employment relationship between the parties;
(2) the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and
(3) the restrictions imposed are reasonably limited in duration and geographic extent.

Citing All-Pak, Inc. v. Johnston, 694 A.2d 347, 350 (Pa.Super.1997).

The Court provided a helpful rundown of some practical considerations in assessing the reasonableness of the covenant:

"[P]ossible adverse effects on [the Employer] that could result from [the Employee's] use of [confidential and proprietary] information on behalf of a competitor;"

The reasonableness of the two-year duration of the non-solicitation period;

The Employee repeatedly signing similar agreements with the Employer; and consideration provided by the Employer;

"[P]ossible negative effects the restrictive covenant may have on [the Employee's] ability to earn a living and support his family;"

"Is the pool of potential customers so small that [the Employee] would have difficulty developing a book of business on his own?"

"Are these types of restrictive post-employment agreements standard and customary in the insurance industry?"

That's a pretty nice list the Court put together for us! But even with this extensive rundown, the Court still instructed the trial court to consider the factors above, "as well as any others that may be relevant to a determination as to whether the non-solicitation clause is reasonable and enforceable."

Sadly, Lawffice Space Non-solicitation Week is over now, but I'll be back next week with some posts on ADAAA developments and more.

The trial court found that the employee "was fired to protect [the employer's] bottom line ... not for poor performance." And this alone was reason not to enforce the covenant. The Court relied primarily on Insulation Corp. of America v. Brobston, 667 A.2d 729, 733 (Pa.Super.1995) which noted that the employer's "need to protect itself from the former employee is diminished by the fact that the employee's worth to the corporation is presumably insignificant." In that case, the employee was "terminated by his employer on the grounds that he ha[d] failed to promote the employer's legitimate business interests."

In Missett, the Court reversed the trial court's decision. It acknowledged the importance of the previous rulings on the issue but said the firing is "but one 'important factor to consider in assessing both the employer's protective interests and the employee's ability to earn a living.'" (Quoting from Brobston itself). The firing alone was insufficient to render the covenant unenforceable.

This logically leads us to the next question (and the subject of tomorrow's post): What are the other factors the trial court should have considered?

Today's issue: Is a non-solicitation agreement enforceable when an employer changes hands. What do I mean by "changes hands?" Well, in Missett, the employee worked for an LLC under a non-solicitation agreement (there's some complicated background, but this is the basic gist). Then, a corporation:

entered into a Purchase and Sale Agreement with [the LLC], pursuant to which it acquired all of the issued and outstanding membership equity interests in [the LLC].

Assuming the non-solicitation agreement was enforceable before the acquisition, is it still enforceable after?

The Court gave a convenient rundown of how Pennsylvania courts have handled similar situations:

In Hess v. Gebhard & Co., Inc., 808 A .2d 912 (Pa.2002), the Court held that “a restrictive covenant not to compete, contained in an employment agreement, is not assignable to the purchasing business entity, in the absence of a specific assignability provision, where the covenant is included in a sale of assets.” Essentially, "an asset purchase results in an entirely new employer/employee relationship."

In J.C. Ehrlich Co., Inc. v. Martin, 979 A.2d 862 (Pa.Super.2009), the Court held that a covenant not to compete remained enforceable following the consolidation of two companies through a stock purchase agreement. Essentially, the "employer remained the same." (There were also some similar federal cases in the Third Circuit).

Back to Missett, the Court "conclude[d] that the sale... of the outstanding membership interests in [the LLC] and the subsequent name change was not a sale of assets and, thus, did not result in a change in the identity of Missett's employer."

In short, when an employer "changes hands" (that's the best catch-all phrase I could come up with), the form of the transaction matters. Missett helps us by providing a rundown of previous decisions involving sales of assets, and stock purchase agreements. It also adds LLC sale of memebrship interests to the string of case law.

Next post, I'll get into the enforceability of the agreement after the employee gets terminated, now that we've established that the LLC membership sale does not render the agreement unenforceable.

Friday, October 8, 2010

This week's employment law case of the week touches on a few hot-button issues - specifically, same sex marriage and religious accommodation. The case is Slater v. Douglas County, 2010 WL 3834564 (D. Ore. Sep. 24, 2010). The County Clerk's office might have to accommodate an employee who refuses to process same-sex domestic partnerships.

The case takes place in Oregon where same-sex domestic partnerships were legislatively recognized in 2007. An employee in a county clerk's office believed that homosexuality is a sin. The employer said it would notify the employee if any other positions opened up but otherwise refused to accommodate her. Eventually she was terminated.

She has a pretty clear prima facie case of religious discrimination under Title VII:

1. She had a bona fide religious belief, the practice of which conflicts with an employment duty;
2. She informed her employer of the belief and conflict; and
3. The employer discharged her because of her inability to fulfill the job requirement.

So the focus shifts to whether the employer made reasonable efforts to accommodate her or whether accommodation would impose an undue hardship.

The Court found that the employer's offer to ship her to another position if one just happened to open up was not a good faith effort to acocommodate. The Court also noted that no effort had been made to ascertain whether an accommodation of the employee's belief would actually impose an undue hardship. For example, could she take on more marriage responsibilities while her co-workers picked up the slack in domestic partner work? Have other counties faced this situation and how did they resolve the issue?

I'll note that there were five clerks in the office after the employee's termination, and the county only processed eight domestic partnerships in all of 2009.

The Court specifically found that the employer failed to "engage in an interactive process." But, the case should still proceed to trial to discern whether any accommodation could be implemented without imposing an undue hardship.

The plaintiff brought a Title VII claim based in part on his employer's failure to promote him in 2003. He did not file a charge of discrimination with the EEOC, however, until March 2005. This was well outside the 300-day statute of limitations (a complex issue, but suffice it to say it was 300 days here) so the District Court granted summary judgment in favor of the employer.

But wait! There was still a glimmer of hope for the plaintiff. Congress passed the Lilly Ledbetter Fair Pay Act (FPA) which took effect in 2009. As the Third Circuit described it:

[E]ach paycheck that stems from a discriminatory compensation decision or pay structure is a tainted, independent employment-action that commences the administrative statute of limitations.

See 42 U.S.C. § 2000e-5(e)(3)(A). So, if his failure-to-promote claim was covered by the FPA, he'd be back in business!

Alas, this glimmer of hope was short-lived. The Court held that "a failure-to-promote claim is not a discrimination-in-compensation charge within the meaning of the FPA." Plaintiff's Complaint made no allegations of disparate compensation during the relevant time period and his factual allegations focused on his employer's failure to promote him. Thus, the Third Circuit affirmed the District Court's grant of summary judgment in favor of the employer.

Sidenote: The Court also noted that the only other Circuit to address this issue similarly held that "the FPA's terms do not cover failure-to-promote grievances." See Schuler v. Pricewaterhouse Coopers, LLP, 595 F.3d 370, 375 (D.C.Cir.2010).

Image: Lilly Ledbetter speaks during the second day of the 2008 Democratic National Convention in Denver, Colorado. By Qqqqqq. Reused under Creative Commons Attribution-Share Alike 3.0 Unported license.

Staub v. Proctor Hospital
Perhaps the catchiest name for a theory of liability in employment law, the “Cat’s Paw” case will be heard this term. In short, the Court will likely clarify when an employer may be held liable for the discriminatory intent of employees who caused or influenced a termination, but did not actually make the decision to fire an employee.

Thompson v. North American Stainless
When an employee complains of discrimination, he or she is generally protected from retaliation. But what if the complaining employee’s fiancé just so happens to work for the same employer? And let’s say, the fiancé just so happens to get fired shortly after the employee made the complaint of discrimination. Any protection? Hopefully, that’s what this case will answer.

Conclusion
I don't know that we'll see any "blockbusters" or "landmarks" in employment law this term. That said, SCOTUS has picked a handful of issues that are both important and crying out for clarification. I also think they're interesting cases. And so another SCOTUS season begins.

Image: That's last year's Court. I haven't tracked down the new class photo with Justice Kagan yet.

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Lawffice Space - Pennsylvania and Federal Labor & Employment Law Blog

Produced by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania. McQuaide Blasko also has offices in Hershey and Hollidaysburg. Mr. Miles works in the firms's Litigation and Labor & Employment Law practice groups, providing legal services to employers and employees relating to human resources, employment discrimination, and other employment law issues.